BackQuant Glossary
Position Sizing
The amount of capital allocated to a trade, usually expressed as a percentage of account or as risk per stop distance. Disciplined position sizing is the difference between surviving drawdowns and blowing up.
Related terms
Perpetual Swap (Perp)
A futures contract with no expiry, anchored to spot via funding payments between longs and shorts. Perps are the dominant derivative in crypto, vastly larger in volume than dated futures. BTC and ETH perps trade 24/7 across every major venue.
Premium
The price of an option, paid by the buyer to the seller. Premium consists of intrinsic value plus time value. In a separate sense, basis premium refers to futures or perp prices trading above spot.
Put Option
A contract giving the holder the right to sell the underlying at a fixed strike price before or at expiry. Buyers profit when the underlying falls below the strike minus premium paid. Most commonly used as downside protection.
Put Wall
The strike with the largest concentration of dealer-positive gamma below the current spot price. Acts as support because dealers progressively buy underlying as price approaches it. A break of the put wall often flips the regime into negative gamma.
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